Laurent A. Voivenel, CEO, HMH – Hospitality Management Holdings, was among the key speakers at the Hospitality Business Summit organised by CPI Media Group in Dubai. Taking part in a live panel discussion on ‘Growing the 3-star Market’, Laurent highlighted the drivers of mid-market as well as spoke about the challenges of competing in a cost-conscious segment.
The scale of opportunity in the region for budget hotels is unprecedented. The number of visitors travelling to the region is projected to double reaching 136 million by 2020 compared to 54 million in 2008. Laurent said, “The region including Dubai is seeing strong economic and tourism growth owing to increasing stopover traffic, rapidly expanding low-cost carriers, growing inter-regional travel, increased airport capacity, new emerging source markets and a growing middle class that is fueling the demand for budget hotels. In addition, a lot of local and international companies are cutting down on their annual travelling budgets and seeking affordable accommodation.”
Capitalizing on this soaring demand for quality budget accommodation in the GCC, HMH had recently reiterated its commitment to enter budget segment with ECOS Hotels. Laurent stressed, “Existing hotel stock in the Middle East, including the UAE, is predominantly geared towards luxury and up-market accommodation. In more mature hotel markets, such as the United States and Europe, mid-scale and budget accommodation comprise more than half of the market’s room stock. But in Dubai, 5-star hotels dominate with a market share exceeding 60% and about a 50% of pipeline supply leaving a huge gap and opportunity for budget hotels that we are keen to penetrate with ECOS Hotels.”
Talking about the expansion plans for the ‘no frills’ B & B brand, Laurent said, “ECOS Hotels is a smart choice for investors offering strong investment opportunity because of lower construction and operating costs and quick and high return on investment. To start with we have three different projects under consideration in the UAE and the first of these will be developed in Dubai.”
Laurent believes it is the best time to do so as Dubai is once again leading the way in the region having given a tax reprieve to investors developing mid-market hotels by exempting eligible hotels from 10% municipality fee levied on the daily room rate for a period of four years if the construction permit is granted between October 1, 2013 and December 31, 2017. Another key trigger has been Dubai Expo 2020. 25 million people are likely to visit the Expo, of which 70% will come from outside the UAE pushing the demand for hotels. According to industry sources a little over 6000 new hotel rooms are expected to come on the Dubai market by 2015, taking the emirate’s total hotel room stock to just over 65000. It is looking to have 80,000 hotel rooms by 2020, meaning more than 15000 new hotel rooms may be built before the event. Dubai is going to have 2443 economy hotel rooms by 2017 in addition to those planned and under construction.
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